Indonesia seeks oil supply contracts with Mideast nations

JAKARTA: Indonesia hopes its return to OPEC in December will bring Asia’s top gasoline importer closer to the world’s main oil producers and ease its reliance on a small group of traders for supplies, said the country’s energy minister.
The Organization of the Petroleum Exporting Countries is expected to approve Indonesia’s request to reactivate its full membership at the group’s next meeting on Dec. 4, making the Southeast Asian country the group’s only net crude oil importer.
Indonesia was the only Asian OPEC member for nearly 50 years before leaving the group at the start of 2009 just after oil prices had hit record highs, and with rising domestic demand and falling production having turned it into a net oil buyer.
Energy Minister Sudirman Said said he believed the decision to suspend its membership allowed “some people to take advantage” of Indonesia being cut off from top oil producers.
“And then we had to depend almost 100 percent on a small group that was dominating supply to the country. That was something we wanted to break up,” Said said.
“If we are in the middle of the core activities (of OPEC members), core discussions, our position will be better.”
Indonesia, until recently, had obtained nearly all of its foreign crude and oil products from trading company Petral, a unit of Pertamina that is being disbanded as part of efforts to clean up the graft-tainted oil sector.
A separate unit within Pertamina is now handling the energy trading.
Indonesia hopes reactivating its OPEC membership will help enhance relationships with top oil producers, potentially leading to long-term oil supply agreements and much needed investment in the country’s energy infrastructure.
The government is currently in talks for long-term oil supply contracts with Iran, Oman and Saudi Arabia.
All OPEC members have backed Indonesia’s request, Said said, with Petroleum and Mineral Resources Minister Ali Al-Naimi in May telling him jokingly that Indonesia is “our brother that just got away for awhile.”
“I see a different paradigm in OPEC. Maybe in the past, OPEC only represented the thinking of producing countries,” Said said.
“I think the attitude is more open.”
An OPEC source said the rules on new members were relaxed in the case of Indonesia as it never officially left the group.
“This is good for Indonesia, (which) gets exposure to the market through OPEC, and it’s good for OPEC to get an Asian member (and) more power,” an OPEC source said.